Daily Forex Trading Analysis

Today’s US Dollar Trading
• USD whipsaws after early sideways start
• US data unfriendly to the Greenback
• As expected, FOMC holds rates firm

Overnight Preview
• USD likely to continue to weaken
• EURO above resistance

Looking Ahead
All times EASTERN (-5 GMT)
• 8:30am USD Final GDP q/q
• 8:30am USD Unemployment Claims
• 8:30am USD Final GDP Price Index q/q
• 10:00am USD Existing Home Sales
• 10:35am USD Natural Gas Storage

Summary
As expected the FOMC held interest rates steady and left the discount window on hold too. The statement was full of the usual “Strong Dollar” rhetoric but after the initial brief USD rally into expected S/R the Greenback reversed hard and fell to new lows on the day across the board. Stops were seen in all pairs but active selling of USD was noted by several shops as the USD made highs around the FOMC announcement. Forex traders were not surprised at the strength of the reversal or the speed and many expressed concern that the USD will get ahead of itself on a decline before the ECB has a chance to raise rates next week. GBP rallied for a high print at 1.9771 after the announcement; traders note that stops were elected at 1.9740/50 area after the first push to there was repelled during the day. In other words, shorts sold ahead of the news and placed their stops close-in expecting a drop which never happened. EURO plowed through near-term resistance and is no officially rallying; stops placed around the 1.5630 area were triggered as layered supply above the 1.5600 area was absorbed after the news. EURO now has no top ahead of the 1.5800/20 area some traders say and a sustained rally may be in the works for tomorrow and Friday. Should the EURO clear the 1.5800 area or beyond by the end of the week that would make this month an engulfing month on the charts—a very bullish scenario. USD/JPY failed to inspire trade either way for most of the day preferring to hover at the 108.00 handle until the Fed news; a brief rally to 108.43 high print was sold aggressively and the rate reversed into low prints at 107.65 within minutes. The rate is unable to break out of the 108.40-107.00 range that has plagued this pair for over a week. When it finally goes one way or the other it could be a spectacular move. USD/CHF also reversed hard making lows on the day at 1.0340; traders expect more. Almost lost in the day’s action was earlier US data, Durables were flat and housing was lower; traders expect that more unfriendly news will be seen for tomorrow as well. In my view, nothing to do but buy dips in EURO and add to open shorts in other pairs.


EUR/USD Daily

Resistance 3: 1.5800
Resistance 2: 1.5750/60
Resistance 1: 1.5720
Latest New York: 1.5674
Support 1: 1.5550/60
Support 2: 1.5500
Support 3: 1.5450

Comments
Rate blasts through resistance and makes highs for the week. Better EMU news helps keep the rate firm. US news likely to create volatility. Russians buying EURO again overnight a good sign but watch for model accounts on the bid the next few days. The 50 bar MA offering resistance; close over the 50 bar likely to draw more buying tomorrow. Bids will likely be in the 1.5580 area or so on any meaningful correction. Expect higher action this week as late shorts get squeezed.

Data due Thursday: All times EASTERN (-5 GMT)

2:00am EUR German Import Price Index m/m
4:00am EUR M3 Money Supply y/y


USD/CHF Daily

Resistance 3: 1.0520
Resistance 2: 1.0500
Resistance 1: 1.0470/80
Latest New York: 1.0350
Support 1: 1.0320/30
Support 2: 1.0300
Support 3: 1.0270/80

Comments
Tight range and low volumes overnight; rate likely to whipsaw today so be ready for volatility. Looking to add to position if rate can clear under the 1.0300/10 area. Rate stuck in a range but still looking to support/resistance hovering around the 100 bar MA. Overhead resistance now at the 1.0480 area. Rate continues to rotate around the 100 bar MA area; a sell off to end the day today would be ideal to set-up for further losses during the week. Buyers appear to be technical traders and expect some momentum accounts on the bid soon. No doubt some bids are profit-taking from the shorts but that won’t last in my view. In my view, the rate needs to be sold on any strength. Hourly sell signals also suggest that the rate is ready to rotate lower again.

Data due Thursday: All times EASTERN (-5 GMT)


Analysis Provided by: Forexpros.com written by Jason Alan Jankovsky.

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